A government 'shared-work' program helps cut payroll costs without laying off workers.
Terminating employees can exact a brutal price from your company and your workers. State governments aren't too thrilled about adding to the unemployed ranks, either. Nearly a third of them have instituted a "shared-work" program to help you cut payroll costs without laying off workers.
Here's how such a program works in New York State: You must reduce workers' hours -- and corresponding wages -- by 20% to 60%. You must also employ at least five full-time employees. Say you decide to shut down your business on Fridays -- thereby instituting a 20% reduction in payroll. A worker who is normally paid $100 per day would collect $400 for his or her four days' work, and $50 for the fifth day. The $50 is paid by the worker's unemployment insurance, not your company.
Workers obviously make out better than they would if they were laid off, and so do you. While you must maintain employees' benefits, you lower base payroll costs by exactly the amount needed. Your unemployment-insurance rates will go up if you participate in the program, but not by as much as if you had resorted to a conventional layoff. In New York, the program is designed to fit erratic sales patterns. You need not participate every week, but you can use the program for up to 52 weeks. -- Ellyn E. Spragins
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Some 500 companies were taking advantage of New York State's shared-work program as of July. Other states with similar programs are Arizona, Arkansas, California, Florida, Kansas, Louisiana, Maryland, Massachusetts, Missouri, Oregon, Texas, Vermont, and Washington. In New York, call 518-457-5807 for details.